Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Social Security in Trouble
Old 05-13-2009, 07:43 AM   #1
Dryer sheet aficionado
mikex's Avatar
 
Join Date: May 2007
Posts: 49
Social Security in Trouble

Guess you heard, SS will be in trouble years earlier than the last prediction. Now I think it's 2037 instead of 2041 before it busts, and 2016 before it pays out more than it takes in. I will probably be able to get something out of it (I'm 51 and plan on taking SS at 62), but for how long?

What are the solutions? Don't you think means testing is part of the solution? Also, they better start making some decisions for very young workers quick, because if they pay into it for 30 years and don't get anything out of it, there's going to be hell to pay when they get to be in their 60s. I'd decide on a cutoff date (if taxes are'nt going to be raised to fund it) and tell the young workers to start funding their retirement by other means. At least they'll have been warned.
__________________

__________________
mikex is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-13-2009, 08:01 AM   #2
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
If Social Security should become means tested it would become a welfare program for the needy. I suspect the first thing to be done to help the numbers will be to eliminate the earnings cap so that every dollar of earned income is subject to FICA. the next step will be to further increase eligibility age, followed by lower payouts followed by higher FICA tax.
__________________

__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 05-13-2009, 08:05 AM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by mikex View Post
What are the solutions? Don't you think means testing is part of the solution?
The more we means test benefits for everything and the more we tax those remaining to pay for it, the more we encourage the "ants" to become "grasshoppers" and discourage people from being productive and profitable. Encouraging more tax *payers* to become tax *consumers* is not a long-term sustainable economic model, IMO.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 05-13-2009, 08:29 AM   #4
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
Shotgunner you clearly don't know much about this issue at all. Higher income individuals would rather be completely shut out of the system than have the cap thrown out because the return on the excess money and still getting SS would be at least negative 25%. Throwing out that cap would be one of the biggest tax increases in history. Means testing will most likely happen, and mathematically its supported by those that would lose it.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 08:34 AM   #5
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
Quote:
Originally Posted by dshibb View Post
Shotgunner you clearly don't know much about this issue at all. Higher income individuals would rather be completely shut out of the system than have the cap thrown out because the return on the excess money and still getting SS would be at least negative 25%. Throwing out that cap would be one of the biggest tax increases in history. Means testing will most likely happen, and mathematically its supported by those that would lose it.
Oh I understand the issue alright. The desires of the high earners may not matter. We have a President who has stated that people who earn over $250K are rich, he has already floated the idea of removing the cap and he has a willing Congress to go along with his ideas. The idea of having one of the largest tax increases in history would seem to follow the idea of some of the largest deficits in history don't ya think?

http://www.taxfoundation.org/blog/show/23353.html
__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 05-13-2009, 08:38 AM   #6
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
"the next step will be to further increase eligibility age"
This should be the next step, but good luck. I personally expect that they will means test it and cutback on benefits by changing the formula, freezing its wage inflation index, etc. That is just an honest assessment of the political will.

Still though, the best move is private accounts(when this issue came up it was accompanied by the worst explanations I have ever seen in my life, the vast majority of the public still doesn't understand that plan). It should get younger people off the system. Then the goverment will be able to justify taking on a little bit more debt and cutting into other programs because one day 20 years down the road, the entitlement will all but stop and the savings would more than pay off the debt.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 08:39 AM   #7
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
It wont pass, period. There isn't a doubt in my mind about that. But you made it sound like you thought it was good policy.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 08:39 AM   #8
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by dshibb View Post
Still though, the best move is private accounts(when this issue came up it was accompanied by the worst explanations I have ever seen in my life, the vast majority of the public still doesn't understand that plan).
That's not going to be an easy sell with a lot of people's 401K plans down by a third or more, and in a time when a lot of people wish they could trade theirs for a DB pension. The last thing they'll want is to trade the only pension-like retirement plan they have for another 401K.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 05-13-2009, 08:42 AM   #9
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
The solvency of SS has always fluctuated with the state of the current economy and future predicted economic growth rate. I think they use 1%, which some argue is too low. The current administration is using the state of SS and medicare to set the stage for "reforms". You can expect to hear more bad news about both until the "solution" is put on the table.

SS is already means tested to some extent (and growing with inflation) with the way its taxed.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 05-13-2009, 08:43 AM   #10
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
More of Obama's thoughts on the Social Security System referenced here:

Obama on Social Security - Eliminate the Social Security Payroll Tax Cap?

Good Policy? I subscribe to "Don't tax you and don't tax me, tax that man behind the tree" :-D
__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 05-13-2009, 08:44 AM   #11
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
I've commented on this in two separate threads. So allow me to quote the key part.

"It is crap because the average rate of return that baby boomers will receive on their money will be 1 percent a year and for the next generation most likely 0 or negative. And by definition the government can't produce "good returns" on anything. If the democrats can't stomach SS going into the markets(and they fail to acknowledge that a portion of the money would purchase secondary guarantees that specifically stated that if the market crashed, the secondary guarantee would bring your balance to the same amount that you would have gotten under the current system) then fine allow people to move the money out of the government into fixed income investments earning 3 to 5 percent(with no risk) instead of the 1 percent they are getting now. Anybody that says that people would end up with less in private accounts instead of government run is either A) a liar or B) ignorant."
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 08:46 AM   #12
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
I don't care what his thoughts are. It wont pass. It wont even pass the house, its political suicide for to many congressmen.

You don't understand that all of his "major" proposals are crashing before his eyes, and when he takes a shalacking on the budget he will realize that. Then he will readjust, and start passing bills that are bareable to a couple of republicans. He's already burned to many of his own congressman, and he is expending political capital on crap faster than any other president in American history. This is Jimmy Carter all over again, and he had even more senators and reps.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 08:50 AM   #13
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
Quote:
I don't care what his thought are. It wont pass. It wont even pass the house, its political suicide for to many congressman.
His thoughts and actions as POTUS does matter. Democrats have a history of passing higher taxes and more regulations yet they control both the White House and Congress at the present time. My advice, never say never. Most of us can only watch what happens and deal with it as best we can.
__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 05-13-2009, 08:54 AM   #14
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
I'll acknowlege that the situation can change, but right now he looks screwed. Regulation is a different story. A $hitload of that is coming down the pike.

In the last 50 years the democrats have controlled more house and senate seats in a lot of sessions. They weren't able to do things as dumb as what he wants to do, and now we have the internet, C-SPAN, the new media, etc. His big ones will crash and burn.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 09:05 AM   #15
Dryer sheet aficionado
mikex's Avatar
 
Join Date: May 2007
Posts: 49
I think SS is important to get straightened out. A lot of companies are doing away with their pensions (like mine, but it doesn't affect me, only new hires), and let's face it, a lot of people just aren't responsible enough to save properly for retirement, or just don't have the extra cash, they're lucky to have a job in a lot of cases.

We need to increase the tax (a little), reduce the benefits (a little), and look, if you have 10 million dollars, I think you can probably muddle through retirement without the SS check coming in - you don't need it.
__________________
mikex is offline   Reply With Quote
Old 05-13-2009, 09:10 AM   #16
Recycles dryer sheets
 
Join Date: Jan 2008
Posts: 384
I'd hate to see this happen, but the age at which you could take SS should be much higher. When SS was started in 1935, it was never meant to provide 30 some years of income for retirees - people didn't live that long past age 65, but now we do. Something has to change.
__________________
JoeDreaming is offline   Reply With Quote
Old 05-13-2009, 09:11 AM   #17
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
Why do you need to increase the tax? Just cut back on spending elsewhere and allow SS to raid into other portions of the budgets for a couple decades. Since the revenue for those other things do come predominately from wealthier American's it will be like you ending the cap without giving a tax increase.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 09:12 AM   #18
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
Actually the average life expectancy wasn't even to 65. I believe it was 63. So essentially FDR created a program where more than half of the public wouldn't ever be able to participate.
__________________
dshibb is offline   Reply With Quote
Old 05-13-2009, 09:13 AM   #19
Dryer sheet aficionado
mikex's Avatar
 
Join Date: May 2007
Posts: 49
Quote:
Originally Posted by dshibb View Post
Why do you need to increase the tax? Just cut back on spending elsewhere and allow SS to raid into other portions of the budgets for a couple decades.
OK, how about Medicare?
__________________
mikex is offline   Reply With Quote
Old 05-13-2009, 09:19 AM   #20
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 164
Simple voucherize it, you could allow every single person on it to go get the best policy on the market, give them $5K a year and still save money. I personally would give them $2K in their HSA instead of the 5(just making a point) and cutout the rest.
__________________

__________________
dshibb is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
When to take Social Security sgeeeee FIRE and Money 244 05-27-2007 10:48 AM
Social Security at 62, 66 or 70? gozzie FIRE and Money 79 03-27-2007 06:52 PM
Social security? cute fuzzy bunny FIRECalc support 12 09-11-2006 01:47 PM
Anybody has trouble with TD Ameritrade data security issues? sailor Other topics 10 08-17-2006 09:03 PM
Social Security @ 62 Social Security2 Hi, I am... 1 09-21-2005 11:16 AM

 

 
All times are GMT -6. The time now is 07:35 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.